I study, and absolutely love, old French Arthurian literature, so I had to add my two cents worth! My favourite versions of the legends include the Chretien de Troyes romances, and the Lancelot-Grail/Vulgate cycle, which Mallory would certainly have been familiar with, as his Morte d'Arthur is influenced from this earlier cycle. I find it beautifully written (in medieval terms, which of course are a bit different to how we view narratives now) and very engaging. Le Mort le Roi Artu has such a tragic inevitability about it, I'd recommend the excellent Penguin translation to read one of the first prose treatments of Arthur's final years and death.
As far as modern retellings go, I really like Marion Zimmer Bradley's Mists of Avalon, purely because she incorporates so many of the figures and events of the medieval tradition, and tells the tales from a feminine slant. As a child, I loved reading my dad's copy of John Steinbeck's 'Acts of King Arthur and his noble knights'; a fantastic retelling of Mallory which doesn't seem to get much press.